Online Payment Transactions


Physicians are gaining access to real-time tools for electronic transactions with insurers

Medical practices have long been dogged by insurers who don't pay in a timely manner. But demands for improvement from physicians, state governments, and even Wall Street (which is hurt by bad press and fines against some insurance industry players) are forcing payers to seek new methods for claims handling and payment. As a result, physicians are gaining access to real-time Internet tools that speed up electronic transactions with insurers -- from eligibility verification and claims filing to adjudication and direct-deposit payment.

"Physicians are very skeptical about insurance companies for the perception of the games that are played when it comes to making payments," says Steven Mash, MD, an orthopedic surgeon with M&M Orthopaedics in Downers Grove, Ill. "It's simple economics, when they don't pay us, the money is in their account."

Past due accounts are a problem, Mash says, because collection efforts cost his practice time and money for phone calls, paperwork, and administrative hassles. "Aging accounts are expensive things. You've got the cost of new statements, postage, phone calls -- the employees and equipment to do these things are expensive. It's a complicated, onerous task."

But now, healthcare is heading toward handling all transactions for physician office visits over the Internet, according to Morgan Tackett, director of electronic data interchange (EDI) for Blue Cross and Blue Shield of North Carolina. Insurers are using the Internet as a universal transaction portal that connects physicians directly with their enrollment, claims, and payment systems.

"Our primary objective in investing in this technology is to help us build a different relationship with providers," he says. "If we can communicate with those healthcare providers differently -- on a 24/7 basis over the Internet -- rather than by telephone or fax, then we can communicate more effectively and more conveniently."

Some insurers host their own web portals. Others use third-party transaction facilitators. Either way, all you need is a Web browser for access. The process is fairly simple:

  • A physician's office sends eligibility verification requests and claims via the Internet. Data can be entered by hand into a Web browser or downloaded in batch file format from the office's practice management system.
  • Payers or their third-party systems can verify patients' eligibility or return an error report.
  • Payers (or third parties) translate submitted claims data into formats that are compliant with the federal Health Insurance Portability and Accountability Act (HIPAA) and perform edits, such as ensuring that all required fields have been completed. More sophisticated systems may also include payer-specific data. Then third-party portals submit claims to the payer or to a claims clearinghouse.
  • The payer or claims clearinghouse performs back-end edits and processes claims. Payers are also able to adjudicate clean claims and make payments.
  • Problem claims are returned to the physician's office for editing and resubmission.

Systems also allow providers to perform real-time checks of a claim's status (adjudicated, pended, denied) and payment status (when and how payment will be sent). Some systems even provide medical office staff with an explanation of benefits for each claim, send information such as when the payment will be made and what the patient owes, and perform electronic fund transfers.

Insurers and third-party portals say the entire process can be completed in less time than it takes to brew a new pot of coffee.
"It only takes a couple of minutes," says Darlene McLain, business services director for Piedmont HealthCare P.A. in Statesville, N.C. "We had to get used to doing things faster. For example, rather than working on denial reports every two weeks, we now work on them immediately, as soon as they come in."

More advanced than EDI

Electronic claims submission has been around for more than 20 years via electronic data interchange between providers and payers. But emerging Internet capabilities are not the same thing as EDI, says Chet Burrell, president and CEO of RealMed, a third-party transaction portal company based in Indianapolis.

"EDI is a submission vehicle -- it gets claims to the payer," he says. "We take the claim and send it to insurers as if we were claims examiners. If [a claim] adjudicates, it's immediately reported to the practice. Adjudicated claims move immediately into the payment stream of the insurer and either a check is cut or an electronic transfer of funds is made."

What easily may have been a 30-day process using paper claims and standard postal delivery can be reduced to a day or two, Burrell says -- but only with health plans that have allowed RealMed to "deeply integrate," or connect directly, with their claims and payment systems. So far, RealMed has achieved that level of system integration with four Blue Cross and Blue Shield plans covering 12 states and the District of Columbia. Currently, about 5,100 physicians from the four Blues are using the system, 2,200 of whom work with BCBSNC. Tackett says he is signing up physicians as quickly as he can.

"Before we went to market with RealMed, we found that we already had a good turnaround time on claims of three to 10 days," Tackett says. "With RealMed, we saw a 10 percent to 30 percent reduction from that."

McLain says that before implementing RealMed for its Blue Cross claims, her practice got paid within 37 to 40 days for all claims -- those submitted on paper and electronically. Blue Cross claims comprise 18 percent to 20 percent of Piedmont's claim volume. "Right now, our Blue Cross Blue Shield claims are getting paid in an average of about 22 days," she says.

Mash's practice was a test site when Blue Cross and Blue Shield of Illinois implemented RealMed two years ago. BCBSI makes up approximately 18 to 20 percent of M&M's claims, Mash says, and that it "has generally performed as advertised. If a patient is not eligible, we find out now, and when a claim is approved, we get a check in seven to 14 days."

Improves workflow

The obvious benefit of Internet transaction portals is that they eliminate the lag time between various stages of the claims process. Kim Ivkov, vice president of interactive marketing for HealthTrio, a transaction portal company based in Nashville, Tenn., says each step of the traditional claims process represents a potential delay, particularly when there are errors. Because the online portals use data taken directly from health plans' systems, the risk for errors is reduced significantly.

"We can automatically pre-populate HCFA forms with the correct data so that the doctor only has to put in the diagnosis and the treatment code," she says.

Even better, the systems can drill down into an individual patient's data; for example, medical offices can seek information about whether a patient is covered for certain types of specialty care during eligibility verification, and determine how much money patients still owe on their deductibles. These capabilities lead to "better quality claims, [reducing] phone calls and re-submissions, which saves both time and money," says Ivkov.

In addition to operational efficiency, practices can speed up their revenue cycles, according to Les Jebson, director of business operations, patient care, and perioperative services for the University of Kansas Medical Center in Kansas City, where he evaluates technology to improve revenue management.

"Ten years ago, you'd enter charges when you got to it. There wasn't a big focus on the revenue cycle," he says. "But now, we have less access to capital -- the cash well has gotten significantly smaller." By using technology to improve cash flow, Jebson says providers can manage their finances better and use the money for other purposes, such as technology investments, staff, and marketing.

Future developments

Transaction processing via the Internet is still fairly new, and it will likely be another 10 years before the majority of provider interactions moves online, according to Hindy Shaman, director of research for the Cap Gemini Ernst & Young Health Practice. She co-authored the recent CGEY study, "How Health Plans are Using the Internet to Reach Customers."

"[What] we know is that in the past, usage was very low, and we know anecdotally that it's increasing," Shaman says.

The study did find that the availability of online claims submission on existing payer Web sites dropped from 53 percent in March 2002 to 44 percent in October 2002. Online referral authorization dropped during the same period. The decreases were primarily because plans took systems offline for testing and HIPAA compliance checks. Shaman says she expects usage levels to rebound by the end of 2003.

As with all emerging technologies, there's room for improvement. By using industry standard processes, Internet portal systems can edit and submit claims for any commercial payer, much like existing claims clearinghouses. However, their primary benefits of speed and accuracy are available only from payers with which they have so-called deep integration.

Processing for government claims, worker's compensation claims, and hospital billing aren't yet available, although some vendors hope to have Medicare and Medicaid products by the end of the year. Shaman says services will be added according to market demand, and the greatest demand is for commercial insurers. The rest should be available within a couple of years, she says.

Freedom of choice for providers is also somewhat limited. Because payers develop or select the Internet portals that connect to their claims and payment systems, practices must use those systems to gain the maximum benefit. In other words, practices can use a single portal with the understanding that it won't provide full functionality with all commercial payers, or they will have to use multiple portals.

On the bright side, once a health plan selects its Internet portal, technical implementation isn't that difficult for providers. As Burrell puts it, "You log onto the RealMed Web site, become a user, sign a subscription agreement, and then test system compatibility. Once it's set up, you can log on when you want, as much as you want."

The pricing and service models for portals are still evolving, too. For example, HealthTrio's service is free to providers. Its payer clients, including Harvard Pilgrim Health Care in Massachusetts and Partners National Health Plan of North Carolina, pay a per-transaction fee for the service and offer it at no cost to their network providers, according to Ivkov. RealMed charges payers a per-transaction fee and charges providers a subscription fee that is based upon the number of doctors in the practice and the volume of claims they file through the system, Burrell says.

Service providers continue to add bells and whistles to systems, too, including greater customization, faster implementation (getting new systems installed for health plans in 90 days), and developing capabilities for providers to digitize supporting documentation for claims that are likely to need medical review.  

Shaman says it isn't likely that there will be a universal system. On the other hand, she says, "We will see a consolidation in the number of vendors. Over time, we'll see simplification. Meanwhile, as these systems proliferate and change, users say, real-time online transactions are here to stay. "I've been a biller for many years," McLain says. "This is the wave of the future."

Sandy Campbell can be reached via

This article originally appeared in the May 2003 issue of Physicians Practice.

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